WINDFALL: Free State Premier Ace Magashule was a director in 2007 of a company that got R15m of the millions missing from pension funds. 

Picture: Bongiwe Mchunu
WINDFALL: Free State Premier Ace Magashule was a director in 2007 of a company that got R15m of the millions missing from pension funds. Picture: Bongiwe Mchunu

Premier denies knowing about R15m

Time of article published Jun 2, 2011

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A business in which the current Free State premier was a director received R15 million of the millions missing from textile workers’ pension funds.

Premier Ace Magashule denied any knowledge of the money.

Magashule was one of the directors of Leading Prospect Trading 42 in May 2007 when it received an interest-free loan of R15m from Canyon Springs Investments 12, which in turn got it from the pension funds.

“At all material times, before he resigned, he was not aware of the alleged transaction, nor did he participate in the authorisation of such loan.

“He never attended any board meeting of the said company,” the premier’s spokesman, Wisani Ngobeni, said last night.

“Based on this fact, the premier is not in a position to answer questions relating to the allegations levelled against the said company. Given these facts, it would be grossly unfair to associate the name of the premier to any of the activities of this company.”

Magashule was not premier at the time of the transaction, but an MPL and the ANC’s Free State provincial chairman.

The loan agreement was signed on May 4, 2007. The money was apparently handed over before the paperwork was signed.

“The lender has advanced the capital amount by way of payment into such bank accounts as were nominated for the purposes by the borrower,” said the agreement.

Seven days later, Magashule resigned his directorship.

Leading Prospect then collapsed and is now deregistered.

The loan was to be repaid by the end of last year, but was not.

There is no indication in the loan agreement why Leading Prospect wanted the money.

Canyon Springs was supposed to get a 35 percent share in Leading Prospect, but it’s not clear if this ever happened or what, if anything, that share was worth. No security was offered for the loan.

The Star tried to find the office in Illovo, Joburg, which was listed on the Leading Prospect company documents as Magashule’s business address. It appears to be a parking lot for a shopping centre.

Canyon Springs issued the loan to Leading Prospect just two weeks after it borrowed R87m in an unsecured loan based on a verbal agreement from a Cape Town-based company called Trilinear, which itself got the money from the SA Clothing and Textile Workers Union pension funds it manages.

The loan agreement was finally written up two years later.

The R87m was never repaid, and the Trilinear trustees have asked the Western Cape High Court to liquidate Canyon Springs.

An investigation by a Trilinear fund manager found that, with interest, Canyon Springs owes the pension funds at least R100m.

The register of companies lists the Canyon Springs directors at the time of the R87m loan as Mohan Patel and Thandiwe Godongwana, who is the wife of former unionist and current Deputy Minister of Economic Development Enoch Godongwana. The Godongwana family are also part owners of Canyon Springs through their shareholding.

Patel and the Godongwanas have declined to comment previously on this issue. The deputy minister confirmed his involvement in Canyon Springs, but denied involvement in the loan.

The companies’ register issued a letter stating that Thandiwe Godongwana was added as a director of Canyon Springs in July last year, backdated to December 2006. The loan went to Canyon Springs from March 2007 to December 2009. - LOUISE FLANAGAN

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